Billionaire Richard Li’s (李澤楷) PCCW Ltd (電訊盈科) plans to sell a HK$8.53 billion (US$1.1 billion) stake in telecommunications unit HKT Trust & HKT Ltd (香港電訊), amassing cash as the Hong Kong tycoon shifts into greater media investments.
Shares of both companies fell yesterday on the territory’s exchange after the announcement.
PCCW will sell 840.7 million shares of Hong Kong’s largest telephone company for HK$10.15 apiece, the company said in a statement yesterday.
That is about 8.4 percent less than the last closing price.
It is the second sale in less than a week for the youngest son of Hong Kong’s richest man, Li Ka-shing (李嘉誠), who is seeking to build on PCCW’s media assets that include pay television, music streaming and movie distribution.
PCCW relied on telecom services for about 82 percent of revenue last year.
Selling down its HKT stake will mean it is entitled to less in dividends from the company as it shifts businesses with potential for faster growth like television and movie content.
“PCCW will repay its debts and continue to invest in its core media and solutions businesses,” Gary Yu, Yang Lsiu and Ansel Lin, analysts at Morgan Stanley, wrote in a note to clients yesterday.
The company is also going to be more active in mergers and acquisitions in its media and solutions businesses, they wrote.
HKT’s dividend contribution to PCCW will be reduced by more than 17 percent to HK$2.4 billion this year from HK$2.9 billion, the three analysts estimate.
After the biggest intraday decline since Aug. 12 last year, PCCW finished down 6 percent to HK$4.57, paring the stock’s gain this year to about 9 percent.
HKT dropped 7.4 percent to close at HK$10.26, valuing the company at US$10 billion and paring its climb this year to about 7.5 percent.
The benchmark Hang Seng index rose 0.6 percent to 23,710.98 points, its highest close since Oct. 11.
PCCW’s 63 percent stake in HKT Trust & HKT will fall to 52 percent after the stock sale, which is being arranged by Goldman Sachs Group Inc.
Beyond media, PCCW will use the proceeds for debt repayments and other general purposes, it said.
Last year, PCCW took part in an investment round in STX Entertainment, the distributor of the feature films Bad Moms and The Gift.
Li last week agreed to sell a UK business to his father’s CK Hutchison Holdings Ltd (長和集團) for £300 million (US$375 million).
PCCW expects to post a gain of about HK$1.3 billion from that deal.
Additional reporting by staff writer
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